Starting Saturday, the beleaguered housing market will confront the latest hurdle to its recovery: The size of mortgages that the federal government can back will be drastically reduced in high-priced regions.
When the bubble burst, mortgage banks had virtually stopped lending, except for government backed mortgages, which were capped at $417,000. Buyers of high-priced homes, mostly on the coasts, found themselves frozen out of the market, unable to get the bigger, "jumbo" loans that they needed..............................................Full Article: Source